The Governor and the Secretary of Education deny that Keleher’s contract with FAFAA poses a conflict of interest

Act 13-1989 establishes that the yearly salary for the secretary of the Department of Education should be $80,000, an amount that could vary, since the officials may receive an additional differential, equivalent to a third of their original salary. (Ramón “Tonito” Zayas)

The contract granted earlier this month to Julia Keleher, Secretary of the Department of Education—which turns her into an advisor for the Fiscal Agency and Financial Advisory Authority (FAFAA)—is not illegal, but it has given rise to a series of questions regarding the implications of having a governmental agency director working as a contractor for another.

Through a contract signed on February 3, Keleher became an advisor for FAFAA to restructure the administrative and curricular areas of the Department of Education, a task for which she will be paid a maximum of $125,000 in five months. Yesterday, Keleher and Executive branch officials said that this would be the only compensation she will receive, since she will not be earning any wages as Secretary of Education. In this case, the amount of money paid through this contract means that Keleher would be earning over three times the amount established by law as the salary for the secretary of Education.

“The Governor believed I was the person with the right expertise to direct the Department of Education, and that I could bring something new as well. It (the salary negotiations) wasn’t an overnight thing. It was a little more complicated, because I had to leave my old life behind and move here,” the Secretary emphasized in an interview with this newspaper.

Act 13-1989 establishes that the yearly salary for the secretary of the Department of Education should be $80,000, an amount that could vary, since the officials may receive an additional differential, equivalent to a third of their original salary.

Former Education Secretary Rafael Román used to earn an annual salary of $106,000.

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“The salary (established by law) would not have been enough for me to (accept the job),” Keleher admitted, stressing that she moved from Washington DC to Puerto Rico when she accepted the appointment, and that she sold her consulting company Keleher & Associates.

As a FAFAA advisor, Keleher will be responsible for coordinating all efforts to carry out a restructuring process in the administrative and curricular areas of the Department of Education. This would be part of the strategies developed by both the local Government and the Oversight Board (OB) to reduce governmental expenses and improve student services.

Other than this outline of functions, the 19-page contract does not include a list of the tasks to be carried out by the Secretary, or the objectives to be achieved.

Arguing that it will save money in the long run for both the Department of Education and the Government, yesterday Governor Ricardo Rosselló and Puerto Rico Chief of Staff William Villafañe defended the agreement that was formalized a little over a month after announcing Keleher’s appointment as the leader of the biggest governmental agency. Rosselló added that Keleher’s consulting firm held a contract with the Department of Education last year for the sum of $231,030.

According to the information available in the Contract Registry of the Comptroller’s Office, Keleher held contracts—adding up to $996,000—with the agency she now leads, from 2013 to 2016.

“She's the ideal person to occupy that position at this historic juncture. And let me tell you—and it goes without saying—that she’s been well accepted within the school community and the Department of Education. She has a sense of urgency about the daily needs in our public education system. So give her some space so her work can yield results,” Villafañe urged.

Both the Governor and the Chief of Staff pointed out that the fact that Keleher will be fulfilling dual functions is not a new situation in the Government, since there were other administrations where officials occupied more than one post. Rosselló insisted in comparing Keleher’s contract for advisory services with the multi-million dollar agreements signed with the company AlixPartners to restructure the debt of the Puerto Rico Electric Power Authority.

“We had to restructure the Department of Education. We had to improve and update the agency. The question is, should we have done it with two separate people or with just one person?” the Governor asked.

Nonetheless, none of Fortaleza’s representatives acknowledged that, in prior instances, it was not a case of an agency secretary holding contracts with another agency. Likewise, in spite of receiving multiple questions in that regard, Rosselló refused to explain why his administration had not revealed the contract, only making it public after it was reported by the press.

Villafañe assured that Keleher’s contract model could be replicated with other agency directors, who could stop earning salaries as Cabinet members to obtain contracts with other agencies. The Governor, however, stated that for the time being they have not contemplated replicating this kind of contract with any other officials.

Although he admitted that it is an atypical method of operation, Zulma Rosario, executive director of the Office of Government Ethics (OEG, by its Spanish acronym), noted that the contract granted to the Secretary of Education does not violate the statutes governing the behavior or appointment of government officials. However, Rosario said, the fact that Keleher is a contractor for FAFAA does not exempt her from complying with the provisions in the Puerto Rico Government Ethics Act, just like all other members of the constitutional Cabinet and public officials.

“The contract was made after she was appointed, confirmed, and sworn in as Secretary of Education. She is the Secretary of the Department of Education,” Rosario assured, adding that Keleher has already attended a workshop that is required for all government officials, and that she is receiving assistance from her office to submit what would be her first financial report to the OEG.

With this contract, Keleher does not cease to be a Government official, since she will be occupying the position of Secretary of Education, even if she does not earn wages. Therefore, she must fulfill all the responsibilities the post entails, according to the Organic Law of the Department of Education. She will also preserve all legal protections as public official, such as personal immunity in the case of lawsuits over her work as Secretary, according to information provided by the Governor’s legal advisor, Alfonso Orona, through a spokesperson.

The Details

The contract signed on February 3 between Keleher and FAFAA Executive Director Gerardo Portela Franco establishes that the Secretary will be paid $20,833.33 per month, which is equivalent to an hourly rate of $208.33. Based on this rate, if the contract is extended, the administrative consultant specialist would be earning $250,000 per year.

The contract establishes that Keleher may not request reimbursements for expenses incurred during the fulfillment of her duties, and that any subcontracted services must be covered with the monthly payment she receives, as long as FAFAA authorizes it.

Although the agreement establishes that Keleher shall owe “allegiance” to FAFAA and may not infringe upon the interests of this governmental agency, it also states that her appointment as Secretary of Education has priority over all other governmental commitments.

“The scope of the work to be done by the advisor from here on out shall not affect her independence of criteria in carrying out her duties as Secretary of Education,” the contract reads.

Keleher denied that there may be conflicts between her functions as Secretary of Education and as FAFAA advisor. On the contrary, she pointed out that she believes her responsibilities in both roles will be complementary.

“What the Board has said is that we need to adjust the size of the system. That’s something that everyone here knew, and it’s something that previous secretaries have worked with. Secondly, and it should be the other way around and it should go first, is that they’ve told us that the product has to show the result of the funds invested in education in Puerto Rico with improvements in student performance. So I am achieving that. I am having the same impact, I’m achieving both goals, which are to make the Department of Education more efficient, and to have more effective results with the children, for less money,” Keleher said.

As an example, the official emphasized that, as Secretary of Education, she will establish procedures to close schools. Meanwhile, as FAFAA advisor, she will have the authority to gather information about the way those empty structures may be used, meet with mayors to determine if innovative projects may be launched in those education centers, and guarantee that those shutdowns will generate the expected savings.

Discomfort

Yesterday, Keleher's hiring though FAFAA and the money she will receive for her services were the object of controversy among teacher organizations, where they made a direct comparison between what the Secretary will earn and a teacher’s base salary, which has been $1,750 per month for over eight years.

Right away, both the Teachers Federation and the teachers' union "Educamos" denounced that Keleher would be incurring in a conflict of interest if she works as Secretary and advisor for the Government. According to Mercedes Martínez, president of the Teachers Federation, granting an advisory contract to the Secretary of Education represents the continuation of a pattern where duties related to the Department of Education are delegated to the private sector.

“It is unacceptable that the person appointed to lead the Department of Education, under the conditions established for such post, is demanding additional pay to carry out the duties for which she was appointed. There is no justification whatsoever to pay $25,000 per month to the Secretary, who would be earning $300,000 at the end of one year. She would be earning in one month what a teacher makes in a year,” said UNETE President Emilio Nieves Torres.

For her part, Aida Díaz, president of the Teachers Association, remarked that, more than Keleher’s salary, what is important is the results from her efforts.

“We trust that Dr. Keleher will have the integrity to tell the Governor and the Oversight Board that the Island's public education cannot be part of the mathematical equations they are working on to repay the debt, and that her function will not be to shut down or consolidate schools to save money that will end up in the pockets of bondholders,” Díaz expressed.

More Than One Hat

Previous administrations have also featured officials who have simultaneously occupied more than one post:

1. Carlos Pesquera during Pedro Rosselló’s administration, the then Secretary of the Department of Transportation and Public Works was known as the “supersecretary” because of his workload. Aside from overseeing infrastructure projects in his department, such as the Urban Train, he was also the executive director of the Puerto Rico Infrastructure Financing Authority, and was part of the governing boards of the Aqueduct and Sewer Authority and the Ports Authority.

2. Norma Burgos in the 90s, she was Secretary of State and president of the Planning Board.

3. Víctor Suárez during Alejandro García Padilla's administration, he occupied various posts, but at one point he was simultaneously Secretary of State, executive director of the Fiscal Agency and Financial Advisory Authority, and director of the Convention Center District Authority.